Greece, Spain, Portugal ranked among EU honorees with market-friendly reforms
Three Southern European countries, including Spain, Portugal, and Greece, have shown higher economic growth rates than the entire EU over the past three years, leading the European economy.
In particular, Greece, which had been on the verge of national bankruptcy, appears to have recovered its basic economic strength.
As a result of analyzing the policies and economic performance of the three Southern European countries (Greece, Spain, and Portugal) with recent notable economic growth over the past 10 years, the Korea Economic Association (KOFIA) found that austerity policies and market-friendly structural reforms were behind the growth. It appears that there was.
Greece, which had once reached the point of national default due to a fiscal crisis, was actively promoted by the Mitsotakis government (New Democratic Party government), which took power in 2019, and market-friendly policies such as austerity policies and improving the investment environment.
The corporate tax rate was gradually reduced from 29% at the time of his inauguration to 22%, and efforts were made to create a business-friendly environment by reorganizing investment and labor-related regulations.
As a result, Greece’s economic growth rate has exceeded the EU average growth rate for the past three consecutive years.
Additionally, the national debt-to-GDP ratio, which had been over 200%, fell to 169% in 2023, recording the lowest level in 11 years.
Spain has also maintained stable growth until recently, excluding the shock caused by COVID-19.
The driving force behind the growth of the Spanish economy is the comprehensive, high-intensity structural reform in labor, pension, and finance that has been promoted since 2011, as well as the active investment attraction support policy.
Spain increased the flexibility of the labor market through labor reforms such as simplifying dismissal conditions and introducing short-term contract work, and improved the economic structure by reducing public investment and strengthening local finances.
Spain’s current account balance has turned into a surplus since ’12. Foreign direct investment (FDI) also showed excellent performance in 2021, recording $38.3 billion, a 169% increase from the previous year.
In the case of Portugal, startups were fostered to improve national competitiveness and foreign investment was attracted through pro-immigration policies.
Representative examples include ‘Startup Portugal’, a national support program for startups, the Golden Visa system that grants permanent residency to foreign investors, and tax benefit policies for high-skilled foreign workers.
As a result, the economic growth rate turned to positive growth from 2015, and reached 6.8% in 2022, the highest level among EU member states. In particular, achievements such as an increase in the number of startups (2,193 in 2016 → 4,073 in 2023) and the creation of a number of unicorn companies were achieved.
Kim Bong-man, head of the Korea Economic Cooperation International Division, said, “Southern European countries’ efforts to improve their pro-market constitution, such as fiscal austerity and active investment attraction, were effective.” He added, “In a situation where the European economy is facing a serious recession due to a recent surge in energy prices, the three Southern European countries “We need to look at how to respond to structural vulnerabilities from this long-term perspective,” he said.
Senior Reporter Park Jeong-yoon [email protected]
